11-29-04 -- Dwyer, James M. -- Conviction -- News Release

Prominent Real Estate Developer Convicted on Ten Counts in Scheme to Defraud Financial Institutions of More than $36 Million

CAMDEN - A prominent real estate developer was convicted by a federal jury today in a scheme where he made numerous misrepresentations to financial institutions to fraudulently obtain more than $36 million in loans - all of which went into default - for business projects and personal property, U.S. Attorney Christopher J. Christie announced.

After nine hours of deliberations, which began Nov. 22, the jury convicted James M. Dwyer, 62, of Upper Township, of all 10 counts contained in the a Second Superseding Indictment. Dwyer was convict on six counts of bank fraud, two wire fraud counts, one count of bankruptcy fraud and one count of making false statements in a bank application to influence bank draws for a construction loan. The case was tried by Assistant U.S. Attorneys Thomas S. DiLeonardo and R. Joseph Gribko.

According to the Indictment, Dwyer was a prominent real estate developer, based in Ocean City, who owned and operated condominium projects, hotels, office buildings and retail properties in New Jersey, Pennsylvania and elsewhere. In 1997, Dwyer purchased the Flanders Hotel/Condominium in Ocean City, and later purchased the attached five retail store/condominium units along the Ocean City Boardwalk. Dwyer also individually or through his business entities owned all or part of the Watson's Regency Hotel and the Homestead Hotel, both in Ocean City, and the Packard Building and the Jewish Federation Building, both in Philadelphia.

During the trial, the jury heard the testimony of more than 40 government witnesses and viewed hundreds of pieces of evidence regarding Dwyer's scheme to provide false documents to various financial institutions to secure loans. The jury found that Dwyer fabricated three compilation opinion letters which falsely indicated that the accompanying statements of financial condition were prepared by Gallo and Co., C.P.A.s, of Cherry Hill, when in fact they were not.

According to trial evidence, Dwyer also submitted to various banks and private commercial lenders false U.S. Individual Income Tax Returns, which claimed adjusted gross income of $873,156 for tax year 1996, $1,699,924 for 1997 and $3,833,503 for 1998. However, U.S. Individual Income Tax Returns that Dwyer filed with the IRS reported an Adjusted Gross Loss of $778,819 for 1996, a loss of $298,610 for 1997 and a loss of $2,523,618 for 1998, according to the Indictment.

Dwyer also fabricated false income statements for his companies showing substantial profits, when in fact the income statements used and relied upon by the Dwyer Organization showed substantial overall losses for those same companies. These false income statements were also provided to the various financial institutions to secure loans for Dwyer and his various companies.

The jury found that Dwyer committed bank fraud in connection with a scheme to defraud National Penn Bank (NatPenn) by making false and fraudulent representations and promises as part of a $16 million construction loan agreement. According to the Indictment, the loan was intended to refinance the creation of office condominium units and related site improvements at the Linwood Business Campus (LBC) in Petersburg, to be accomplished by JMD-VJ-Linwood LLC (JMD-Linwood), of which Dwyer was the principal. Under the loan agreement, all funds were to be disbursed in accordance with a construction draw schedule and cost breakdown satisfactory to NatPenn. The jury heard testimony that loan proceeds were diverted to cover expenses associated with other projects and for personal uses. In April 2001, Dwyer defaulted on the construction loan, owing NatPenn approximately $9 million.

In convicting Dwyer, the jury also found that between March 1999 and September 2000, Parke Bank, with offices in Sewell, made eight loans to Dwyer, either individually, with his wife, or through his business entities, totaling $6,545,400. The loans included a $1 million loan to refinance Dwyer's residential mortgage on his penthouse property at the Flanders Hotel/Condominium; a $2,782,900 loan to refinance debt on the Flanders parking lot; $300,000 to refinance retail store/condominium unit #1 at the Flanders; $200,000 to refinance three condominium units at Watson's Regency Hotel; $300,000 for real estate investment purposes at Watson's Regency Hotel; $937,500 to purchase and/or refinance retail store/condominium units #2, 4 and 5 at the Flanders; and, a $725,000 loan to fund deposits on the Linwood Business Campus development project.

Before making its decision to fund the above loans, Parke Bank required Dwyer's personal financial information. In March 2001, Dwyer defaulted on the above loans, owing Parke Bank approximately $6 million. The jury found the financial information Dwyer had submitted was false.

The jury also found that Dwyer defrauded four additional banks and two private commercial lenders through his scheme, in which he provided the fraudulent financial documents in order to obtain loans. For example, in May 2000, as a 100 percent shareholder and president of JMD, REID, VJX, Inc., a New Jersey corporation with offices in Ocean City, Dwyer signed on behalf of the corporation for a $3.15 million loan from First Republic Bank in Philadelphia, to refinance a $1.25 million loan and for $1.9 million in expenses in connection with the purchase of two real estate properties, the Packard Building and the Jewish Federation Building, both located in Philadelphia. In April 2001, Dwyer defaulted on the loan owing First Republic the full principal amount of $3.15 million.

Additionally, the jury found that Dwyer, through his various businesses, defrauded Third Federal Savings Bank, with offices in Newtown, Pa., on an $810,000 loan for real estate development and a $900,000 to acquire Flanders condominium units (the Flanders Grille Restaurant); Willow Grove Bank, with offices in Maple Glen, Pa., on a $675,000 loan to refinance the Ocean Room Restaurant at the Flanders Hotel; Roxborough Manayunk Bank, with offices in Philadelphia, on a $5.7 million loan to refinance the mortgage on the Homestead Hotel in Ocean City; Amresco Commercial Finance, Inc., a privately-held corporation with offices in Boise, Idaho, on a loan for $9,444,444 with the proceeds used to refinance a pre-existing Amresco loan and the remaining $4.6 million wired into a bank account in Dwyer's name; and, Cambridge Holdings Group, Inc., a privately-held corporation with its principal office in Washington, D.C., on a loan of $1.5 million.

The jury also determined that during a November 2003 deposition in connection with Dwyer's bankruptcy filing, while under oath, Dwyer made false statements regarding two documents concerning the Dwyer's family assets. During the deposition, Dwyer testified that a document titled "Dwyer's Family Inventory Sale Value $95,000" was prepared on April 3, 2001, by an individual identified in the Indictment as M.H. According to the Indictment, Dwyer stated that he and his son signed the document while having it notarized that same day. Dwyer also stated that he did not provide M.H. with the $95,000 value. According to the Indictment, the second document, which was also signed by Dwyer and purportedly notarized on April 3, 2001, was titled "Bill of Sale" and stated that the inventoried items were sold to Dwyer's son for $95,000.

The jury determined that Dwyer's statements were not truthful because the inventory document and the bill of sale document were not prepared until the Fall of 2001 - shortly before Dwyer's bankruptcy filing. Furthermore, according to trial testimony, Dwyer did in fact provide M.H. with the $95,000 value which was placed on the inventory document and the April 3, 2001 date notarized on those documents was back-dated.

Judge Simandle scheduled a hearing for Wednesday to determine Dwyer's sentencing factors, which include, among other things, fraud loss, sophisticated means, and more than minimum planning.

Christie credited Special Agents of the FBI Atlantic City Resident Agency, under the direction of Special Agent in Charge Joseph Billy, Jr. for investigation of the case.

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Defense Attorney: F. Emmitt Fitzpatrick, III, Esq., Philadelphia